Failed carbon farm company ignored expert's advice

Matthew Cranston, Rory Callinan

A company part-owned by News Corp disregarded advice from a leading carbon trading expert and went ahead with a plan to establish the world's largest carbon farm which failed leaving taxpayers millions of dollars out of pocket.

RM Williams Agricultural Holdings, which received $9.1 million in taxpayer funding to establish the venture, had secretly agreed to provide enough carbon to offset all of the News Corp's emissions for five years.

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Fairfax Media has learnt that Ken Newcombe, former Goldman Sachs' head of commodities, and a world expert on carbon trading was quietly dumped as the company's carbon adviser in 2010.

And when he tried to counsel the company against investing in the Henbury deal, he was ignored.

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Mr Newcombe said the company believed it was going to be getting three tonnes of carbon per hectare per year - an impossible figure.

''It was absolutely impossible to imagine getting three tonnes per hectare per year,'' he said. ''That's what you get in a moist environment if you managed it really well and I don't know of any records of annual soil carbon increments of that level.''

Mr Newcombe, who led the development of the World Bank's Prototype Carbon Fund, said David Pearse, the company's managing director, had put forward the figures. He said he made it clear to the company that there was no way Henbury could produce carbon at the level Mr Pearse was proposing, and that he pointed out to the company that Henbury and central Australia was very volatile with the eco system being driven by El Nino and La Nina events with big pulsing systems of long droughts and big wets and was also fire prone.

He said he was dumped in mid-2010 when the company decided not to execute the already negotiated contract to have C-Quest act as the company's carbon adviser.

''We thought we had an understanding that the company would go ahead and honour the spirit of the shareholders agreement and enter into a carbon services contract but when it came down to it, he [David Pearse] withdrew from it.

''After mid-2010, we ceased to become active in any carbon asset management decisions and it was during that period that the decision to invest in Henbury was taken.''

Mr Newcombe also revealed that despite his opposition to the project, he was mentioned in promotional material as supporting the deal. He objected in writing to being associated with the deal.

He said he believed that Mr Pearse had been involved in convincing Rupert Murdoch to support the carbon deal.

Documents revealed the company granted News Corp an option to purchase up to 100,000 tonnes of additional carbon credits per calendar year for a period of five years starting in 2012.